Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

Spirits in Latvia

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Executive Summary

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PROSPECTS

Liquors and whiskies continue to grow

Sales within the largest spirits category, vodka, remained flat in 2018. Vodka is losing its popularity to more fashionable and seemingly sophisticated and mostly imported whiskies, rums, gins, tequilas and liqueurs, which are more in demand among young adult consumers.

Increasing excise tax affects price-sensitive consumers most

Rising excise tax is more heavily reflected in price increases for spirits than for lighter alcohol categories, making products less affordable for both local and cross-border shoppers. While mainstream and more sophisticated and affluent consumers, who opt for quality over quantity, are less affected by this change, price-sensitive consumers face the choice of paying more, migrating to other categories or opting for illegal products.

Trend towards imported products

International fashion trends are spilling over into spirits in Latvia, resulting in the increasing popularity of craft products, gin, whiskies, etc. Highly internationally younger mobile consumers are strongly susceptible to fashion in spirits, with this trend being strengthened by the promotional efforts of international producers and importers.

COMPETITIVE LANDSCAPE

Leading players benefit from strong brand awareness and distribution networks

Spirits sales remain fragmented in Latvia, with local manufacturers supplementing their own ranges with imported assortments. Furthermore, local producers such as Latvia’s Balsams also heavily rely on extensions of already well-established brands, such as Rigas Balsams, to maintain sales share.

Quality over quantity, domination of imported goods

Rising disposable incomes among Latvian consumers continue to stimulate interest in better quality spirits. As a result, sales of premium brands will continue to rise at the expense of cheaper, lower quality, alternatives over the coming years.

Lidl’s entry to increase competitive pressure

Leading international discounter Lidl is expected to open its first stores in Latvia in 2020, with the company set to introduce a large range of imported and private label spirits. As a result, the entry of the retailer will have a significant impact on competition within spirits in Latvia over the coming years.

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